Module 13 Controlling

1. What is the concept of controlling?

-It is the process managers go through to find out what has been accomplished compared to the
predetermined targets
-It is a systematic effort to compare performance to predetermined goals, objectives or
standards in the plan to determine whether performance is in line with those standards or there
are gaps/deviations to be corrected.
-Peter Drucker’s definition:
 The management function that aims to keep activities directed in such a way that
desired results are achieved. Monitoring performance is the starting point of all
controls. In case performance deviates from what is expected, corrective action must
be taken to put the process back on track
 It is the function by which management compares performance to predetermined goals,
objectives or standards set in the plan. Objectives and standards serve as yardstick or
benchmark of performance
 The objective of controlling is to determine if there is any deviation, gap or difference
between performance and standards. If there is, management is supposed to take
corrective action to ensure that resources are used in the most efficient and effective
manner to attain the objective

2. What are standards?

-It is the level of activity established to serve as a model for evaluating organizational
performance

3. How is controlling integrated into the functions of management?

-Planning the initial management function begins the process by setting goals and objectives
which serve as standards or benchmarks against which performance are measured or evaluated
through the managerial function of controlling
-Organizing mobilizes and assembles resources – human, financial, physical, informational,
technological – needed to achieve the goals and objectives
-Leadership provides the element necessary to accomplish the planned goals and objectives
with efficiency and effectiveness.

4. What is control in the context of modern management? What is the idea of control?
-Control is the process of monitoring activities to ensure that they are being accomplished as
planned and of correcting any significant deviations
-Control is making something happen the way it was planned to happen
-An effective control system ensures that activities are completed in ways that lead to the
achievement of the organization’s goals
-The criterion that determines the effectiveness of control system is: how well it facilitates the
achievement of the goal
5. What are the three approaches to designing the control process?
-Market Control
 An approach to designing control system that emphasizes the use of extensive market
mechanisms to establish the standards used in the control system
 The approach is used by organizations in which the firm’s products or services are
clearly specified and distinct and where there is considerable market place competition
-Bureaucratic Control
 Emphasizes organizational authority
 Relies on administrative and hierarchical mechanism, such as rules, regulations,
procedures, policies, standardization of activities, well-defined job descriptions, and
budgets, to ensure that employees exhibit appropriate behaviors and meet
performance standards.
-Clan Control
 Regulates employee behavior by shared values, norms, tradition, rituals, beliefs, and
other aspects of the organization’s culture
 Often used by organizations in which teams are common and technology is changing
rapidly
6. What are the steps in the control process?
-Setting the standards/benchmark objectives
-Monitoring and measuring actual performance
-Comparing actual performance against a standard
-Taking managerial actions to correct the deviations or gap in performance
7. What are the sources of information to measure actual performance?
-Personal observation
-Statistical report
-Oral reports
-Written reports
8. How do you compare or measure performance against the standard?
-Some variations in performance can be experienced in all activities
-It is critical to determine the acceptable range of variations
-Size and direction of variation may be taken into account
-Deviations that exceed this range need the manager’s urgent attention
9. What are the options open to the manager in the face of deviations or gaps?
-Do nothing
-Correct the actual performance
-Revise the standards
10. What are the types of control
-Feedforward Control
 Control that prevents anticipated problems
 It takes place in advance of the actual activity
 Requires timely and accurate information that is often difficult to produce
-Concurrent Control
 Occurs while the activity is in progress
  Management correct problems or deviations before they become too costly
 It is direct supervision
-Feedback Control
 Control imposed after an action has taken place
 Financial statement is one example
 Damage is already done
-Management by Walking Around
 Manager goes out in the work area, interacting directly with employees and exchanging
information
11. What are the qualities of an effective control system?
-Accuracy
-Timeliness
-Economy
-Flexibility
-Understandability
-Reasonable criteria
-Strategic placement
-Focus on the exceptional
-Multiple criteria
-Corrective action
12. Standards at GE
-Profitability standards
 ROI
 Preventive maintenance that reduces labor costs and equipment downtime
-Market position standards
 Market share (highest or second highest)
 Anything below the target position will be sold to another firm
-Productivity standards
 Production levels of the various segments of the organization
-Product leadership standards
 Leadership in product innovation
-Personal development standards
 List of training programs GE personnel should undergo to develop properly
-Employee attitudes standards
 Positive attitudes
-Social responsibility standards
 Create a better facility for a number of San Diego’s disadvantaged citizens
-Standards reflecting the relative balance between short and long-range goals
 Short range goals exist to enhance the probability that long-range goals will be attained
13. Robins & Coulter Hierarchy of Controls
-Strategic Controls: Control mechanism that complements plans at all levels
 Budget
 Profitability
 Social responsibility
 Asset management
 Human resources
 Technological progress
 Monitoring techniques for evaluating competitors, economic conditions, financial
trends, market behavior, technological advances, and a variety of social conditions
-Tactical Controls: Division heads are concerned with controls that match their planning
responsibilities
 Functional performance expectations in production, marketing, finance, and human
resources
 It is use for coordinating lower-level operational activities as well as for collecting
information used at higher levels by strategist
-Operational Controls: First line supervisors spend a relatively greater amount of time
controlling a firm’s activities
 Monitor daily work
 Adjust task activities
 Report results
 Focus is on sales, production scheduling, purchasing, inventory control, logistics
maintenance, and cash flow